Hong Kong shares trimmed losses to 3.6 percent on Thursday on hopes of further succour for the markets from the US government, but the main index closed below 14,000 points to take losses this year to more than 50 percent. Energy stocks such as PetroChina plunged after crude oil prices stayed weak, while resources shares such as China Shenhua Energy fell on fears of slowing demand.
"There was some late bargain hunting as US stock futures were seen higher. There is a lot of talk in the market, including a likely Fed rate cut," said Andrew Sullivan, sales trader with Main First Securities. Investors focused on slackening corporate bottomlines and trading losses related to currency hedging after a string of dismal quarterly earnings and forex loss warnings this week. Jiangxi Copper fell 7.9 percent to a two-year closing low of HK$3.83 on concerns about its bleak earnings outlook and an investment loss in the third quarter.
But China Overseas Land dodged the downdraft, advancing 8.1 percent after the government announced measures on Wednesday to boost flagging property prices on the mainland. Guangzhou R&F Properties climbed 4.6 percent. The benchmark Hang Seng Index closed 506.11 points lower at 13,760.49 after dropping 6 percent earlier on Thursday.
The index has shed 50.5 percent so far this year and lost 10.2 percent in three sessions including Thursday's slide. HSBC Holdings, Europe's largest bank and the most heavily weighted stock on local blue chip index, slid 3.1 percent to HK$100.6.
The stock fell below HK$100 for the first time in more than five years earlier in the day. But HSBC has still outperformed the broad market, falling 24 percent since the start of the year. The China Enterprises Index of top locally listed mainland Chinese companies was down 4.4 percent at 6,403.15. Shares of China Railway Group plunged 7.1 percent after the biggest railway and construction builder on the mainland disclosed 1.9 billion yuan ($278 million) in foreign exchange losses for the first nine months of 2008.
Merrill Lynch cut its rating on the stock to underperform from buy after slashing its 2008 earnings estimate by 61 percent to 1.5 billion yuan owing to the forex loss. Energy stocks plunged after crude oil prices stayed weak on a strong US dollar and signs of a slowdown in demand from China. Asia's largest oil and gas producer, PetroChina, fell 5.1 percent to HK$5.45, its lowest close in three years.